In a first-of-its-kind finding, the U.S. District Court for the District of Maryland has ruled that lost data and the compromised operability of a computer system resulting from a cyberattack, both qualify as “direct physical loss” under a businessowners policy. The case is National Ink & Stitch, LLC v. State Auto Property & Casualty Insurance Co. No. SAG-18-2138, 2020 U.S. Dist. LEXIS 11411 (D. Md. Jan. 23, 2020)
National Ink & Stitch, LLC (National Ink), is an embroidery and screen printing business that was covered by a business owner’s insurance policy from March 31, 2016, to March 31, 2017, through State Auto Property & Casualty Insurance Co. (State Auto) National Ink stored art, logos, and designs for its business on its computer server, which also housed software for graphic arts, shop management, embroidery, and webstore management.
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